Sunday, April 5, 2009

What Is Beyond Socialism?

Geithner to Banks: Get Federal Help, Government Decides Your Executive Line-Up

WASHINGTON -- The government may require new faces in executive suites at banks requiring "exceptional assistance" in the future, Treasury Secretary Timothy Geithner said Sunday.

Critics of the Obama administration's move last weekend to force out the chairman of General Motors Corp., Rick Wagoner, as a condition for possible additional federal loans say that strong government intervention contrasts with measures placed on the financial industry in return for billions in infusions.

Geithner denied there was a double standard and put banks on notice that they may need to change leadership teams in exchange for accepting more money in the future.

"If, in the future, banks need exceptional assistance in order to get through this, then we'll make sure that assistance comes with conditions, not just to protect the taxpayer but to make sure this is the kind of restructuring necessary for them to emerge stronger," he told "Face the Nation" on CBS. "And where that requires a change of management of the board, we'll do that."

The treasury chief said that is what has happened at some big institutions that are getting large amounts of government aid. They include the mortgage companies Fannie Mae and Freddie Mac, which were placed into conservatorship by the government last September, and insurer American International Group Inc., the recipient of more than $170 billion in help since last fall.

"We've already seen a substantial number of the largest banks in our country fail or be absorbed by other institutions, no longer existing at independent institutions. And where the government has acted, like in Fannie and Freddie or like in AIG, where we've had to do exceptional things to stabilize them, we have replaced the management and the board," Geithner said.

"And we've done that because we want to make sure that taxpayers' assistance is going to make these companies stronger, make sure there's accountability, make sure it comes with strong conditions. And we'll do that in the future if that is necessary," he added.


There have been circumstances here in Michigan where the state government has instilled overseers for school districts and at least one city (Flint) when their fiscal status is at a level in which they are in danger of collapse. I've always thought that the practice was a little extreme but probably necessary in the particular circumstances.

One thing that made it tolerable was that it was one governmental entity to another. When it is the federal government taking control of corporations, that is not nearly as comforting.

There is a strong argument in governmental oversight and even setting conditions for the bailout money they are throwing around. Firing CEO's and naming replacements, determining compensation, or selecting the boards of directors is going way beyond mere stipulations.

The thing that I find most alarming in this article is the ease at which the Obama administration is doing this. They have reached a comfort level in controlling businesses that is scary.

There has been much discussion on some news programs (okay, mostly on Fox), in online articles, and on the blogs of Obama steering us towards a European style socialism, we may have been reading him all wrong. The moves this administration have been making over the last few weeks are more reminiscent of a Venezuelan style government.

We may be looking back in the years ahead and realize how naive we were in the early months of the Obama Presidency.

For an excellent read on this very subject, check out this article by Stuart Varney of the WSJ.

Obama Wants to Control the Banks

11 comments:

Brooke said...

So how's it going, comrade?

*sigh*

Always On Watch said...

The thing that I find most alarming in this article is the ease at which the Obama administration is doing this. They have reached a comfort level in controlling businesses that is scary.

And now the federal government is refusing to allow banks pay back TARP funds, taxpayers' money.

We're in deep, deep trouble.

2010 is critical. We must overturn this Congress!

mksviews said...

I like you worry about developments like this. In a way it's a wake up call to big business, if you want to take taxpayers money, it ain't free. The bit that's got me worried is that big business doesn't see all that worried by all this.

What if big business and the democrats are in the tank together. If that's the case then there is no hope, together they can screw over the little guy, small business which is the backbone of the economy out of the field. They it's really all over, it's like present day Russia or something.

Chuck said...

Brooke, back in the USSR

AOW, dead on. 2010 is pivitol.

We retake at least one chamber, we slow the implementation of his plans.

The Dems keep control, they feel they have a mandate to continue with what they are doing and there will be Hell to pay.

MK, there has been some rumbling in the business community. Some are looking real hard at whether they need future bailouts.

Flavor Country said...

Private or Public held business do not have to except funds from the government, hence no government control.

Would you rather them give money and keep bad management? I hate government involvement as much as the next guy, but you are not required to take money.

If you want to fail on your own, so be it, but if you want Uncle Sam's help........he is your new daddy.

You are no longer a non-governemnt organization, company etc.... you have excepted government money, hence their rules. You can't have it both ways.

Chuck said...

Flavor, while I can see your point, I can't agree. I do want them to wartch our money. This is one of the reasons I was against the Bush bailout package, he and Congress did not insist on oversight so we have no way of knowing where the money went. I could even go as far as the government saying they need to get new leadership in the company. Obama is going too far though. He is inserting himself in the day to day running of the company. This really is only a step away from Hugo Chavez nationaliing companies. Finally, let's not forget that more than one Dem (some of them influential Congressional members) have gone as far as proposing we nationalize the oil industry in the US. Sound familiar?

Mustang said...

Flavor, tell that to Gov. Mark Sanford of SC. The federal government first stated that Gov. Sanford did not have the authority to reject bailout money. Next, they offered that money directly to the State Legislature. Next, the feds spent several million dollars in an ad campaign designed to force public opinion against Sanford's decision to reject the money. Finally, they threatened a federal lawsuit.

I think your argument is incorrect but even worse than that, we are observing an overt violation of the Tenth Amendment. This should be more alarming to you than the simple matter of bailout funds disbursements.

And should I ask, where do you think those millions of dollars for the ad campaign money came from?

Flavor Country said...

Mustang,

Mark Sanford is part of the government hence he must follow it's rules and stipulations.

I really don't understand what the problems is. You don't want government input on your business corporation........don't request bailout assistance.

You saw what Ford did, they backed out of future bailouts so they would not have to deal with the rules.

Some banks are doing the same thing after hearing the rules.
I guess they were not hurting as bad as they let on.

If I do not want the government to butt in to my business, I won't ask them for a dime.

This has been going on for years, just cause the Obama administration is not hiding it has not change anything.

The oil companies in the past did the same with the Bush administration and with Clinton also, they recommended who they wanted to run certain sectors of business.

Guys the government is always been there don't freak out because it's not hiding in the dark anymore. I don't want them involved in my business......hence I will and continue to do it on my own.

Chuck said...

Flavor, I'm a little skeptical of your claim that Bush and Clinton helped pick the leaders of these companies. Even if true, there is a huge difference between suggesting (this happens in all levels of government and business, it's called cronyism) and mandating. Also, let's keep in mind the rendering of clothing on the left when Chaney simply met with oil industry executives.

Flavor Country said...

Chuck

I admit this move is scary. But what is your alternative.

Do we give them more cash and let them spend how they want with the management like they did the first time last year, or do we let them fail on their own?

Personally I did not want to bailout anyone. I anted them fail and start over or make room for someone else.

We complain about the government by everybody still takes what they give us. We got our stimulus checks and spent them too.

Making a deal with the government democrat of republican is like dealing with the devil.

LASunsett said...

//Mark Sanford is part of the government hence he must follow it's rules and stipulations.//

Where, specifically, in the U.S. Constitution does it say that any governor of any state must accept bailout funds from the federal government?